Saudi Arabia produced an additional 450,000 b/d in order to compensate for the shortage in Venezuelan supplies as a result of oilworkers joining a general strike that began in early December. Venezuelan production, which ran at 2.9 million b/d in November, averaged a million b/d in December and fell to 650,000 b/d in January.
Excluding Iraq, which exports oil under the United Nations' oil-for-aid program, the ten OPEC members with crude output quotas managed to boost their combined output from 22.85 million b/d in December to 23.21 million b/d in January.
This exceeds the 23 million b/d ceiling in effect through January by 210,000 b/d. But it falls below the new 24.5 million b/d ceiling agreed at an emergency meeting last month, which came into effect at the beginning of February.
"It's a difficult time for OPEC," said John Kingston, Global Director of Oil for Platts.
"On the one hand, oil prices are still relatively high because the market is concerned about a possible war with Iraq. On the other, some top OPEC officials fear that, having increased the ceiling twice in the past two months, OPEC might be forced to cut back drastically in the second quarter."
In order for OPEC to meet the new ceiling, it will have to increase production by 1.29 million b/d in February. Saudi Arabia, the only OPEC member with a significant volume of spare output capacity, pledged at the beginning of the month that it would ensure that OPEC output met its new ceiling and avoid any potential supply crunch. Saudi Arabia could quickly expand its crude export by an additional 1 million b/d, analysts say.
Some OPEC ministers have expressed concerns that, even if Iraqi oil exports are halted in the event of war, the combination of a seasonal fall in oil demand at the end of the winter and a rising Venezuelan oil production could result in a significant volume of oversupply in the second quarter.
Country-by-country breakdown of production with figures in millions of b/d:
Most Popular Articles